Suen Hung Shan v. Wong & Ouyang (HK) Ltd

HCA 1796/2020

[2024] HKCFI 268

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1796 OF 2020

(Transferred from Labour Tribunal Claim No. LBTC 1833/2020)

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DECISION

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INTRODUCTION

1.This Court handed down its Judgment after trial on 24 November 2023 (“the Judgment”), in which the plaintiff’s claim against the defendant was dismissed, and a cost order nisi was made for the plaintiff to bear the defendant’s costs of the action (including all costs reserved), to be taxed if not agreed (“the Cost Order Nisi”).

2.On 8 December 2023, the plaintiff applied to vary the Cost Order Nisi to “No cost order”.

THE PLAINTIFF’S GROUNDS

3.The plaintiff relied on the following grounds in support of his application:

“1. The plaintiff is only an employee who complaint for outstanding salary and unlawful deduction of accrued benefit under [section 70 of the Employment Ordinance]. All employee shall be entitled to complaint it to Labour Tribunal (“Ground 1”).

2. The plaintiff has already lost his job due to the event and was forced to [retire] because of old age and cannot afford the huge cost under cost nisi (“Ground 2”).

3. The employer is one of the largest architectural firm in HK. The misunderstanding of this dispute was caused by the defendant who had used exactly the same wordings in all previous engagements of plaintiff till completion of designated projects which caused the dispute on whether or not the employment is a project based fixed term contract (“Ground 3”).

4. Plaintiff have tried many times to settle the dispute on offering a 50% salary deduction in order for the employer to re-employ plaintiff (“Ground 4”).

5. Without prejudice saved as to cost emails dated 6/10/2020, 11/1/2012, 25/2/2021, 27/4/2021 from plaintiff to defendant’s former senior director Mr Robert Lam were enclosed (“Ground 5”).

6. Defendant’s did not deny the case in Labour Tribunal’s defence (“Ground 6”).

7. Defendant’s only barely denied the case in pleaded defence (“Ground 7”).

8. Defendant’s failed to call an important witness who prepared lengthy witness statement and enclosure which caused the adverse inference to the litigation by prolonging the plaintiff’s preparation of further submissions. i.e. PTR, opening submission, final submission and reply to final submission. The defendant’s cost shall be excluded together with plaintiff’s cost on the fail to call witness shall be offseted by the defendant’s other cost, if any (“Ground 8”).

9. Similar labour case transfer from Labour Tribunal had no order of cost from employee (“Ground 9”).”

THE LEGAL PRINCIPLES

4.The starting point is Order 62 rule 3(2) of the Rules of the High Court (Cap.4A, Laws of Hong Kong) (“RHC”) which stipulates that:

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

5.Order 62 rule 5 of the RHC has further provided that:

“(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account—

(aa) the underlying objectives set out in Order 1A, rule 1;

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2);

(d) any written offer which is expressed to be ‘without prejudice save as to costs’ and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful;

(g) any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

6.In Ko Hon Yue v. Chiu Pik Yuk, the wife and intended administratrix of Liu Ching Leung, deceased [2018] HKCFI 1973, Chu JA (as Chu VP then was)[1], having referred to the aforesaid rules, had the following to say:

“15. The Court of Appeal had held that, post-CJR, the approach is not to regard the proposition that costs should follow the event as a general rule, but only to operate in shifting to the unsuccessful party the burden of showing why some different approach should be adopted on the particular fact of the case: Wong Kam Tong v. Tin Shing Court, Yuen Long (IO) (No. 2) [2012] 2 HKLRD 1128 at [11] to [13]; Hung Fung Enterprises Holdings Ltd v. Agricultural Bank of China [2012] 3 HKLRD 679 at [100]; Pfeiffer GmbH v. Cheung Hay Kit t/a Sun Wai Construction, unreported, CACV 245/2013, 29 October 2014 at [7] to [10] and [20]; and Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Limited (formerly k/a Hong Kong Construction (Holdings) Limited, unreported, CACV 192/2014, 7 March 2016 at [24].

16. At the same time, post-CJR the Courts are more ready to make costs orders that reflect the outcome of different issues, and it is no longer necessary for the winning party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed: Pfeiffer GmbH v. Cheung Hay Kit t/a Sun Wai Construction, supra, at [20]; and Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Limited formerly k/a Hong Kong Construction (Holdings) Limited at [25]. The objective, as explained by Lord Woolf MR in AEI Rediffusion Music Ltd v. Phonographic Performance Ltd [1999] 1 WLR 1507 at 1522-1523, is to require litigants to be selective as to the points to take because ‘[i]f you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so.’ In this regard, the third principle in Re Elgindata (No. 2) [1992] 1 WLR 1207, 1214 A-C should be less generally followed.

17. Moreover, Order 62 rule 5(1)(e) and rule 5(2)(a) and (b) also direct the Courts to have regard to the conduct of the parties, including whether it was reasonable to raise, pursue or contest a particular allegation or issue, and the manner in which an allegation or issue was pursued. Whether a matter is an issue will depend on the circumstances of the case. However, in the light of the underlying objectives in Order 1A rule 1, in construing rule 5(2), ‘issue or allegation’ should not be narrowly confined: see Wong Kam Tong v. Tin Shing Court, Yuen Long (IO) (No. 2) at [16]; and Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Limited (formerly k/a Hong Kong Construction (Holdings) Limited at [25].”

DISCUSSION

Ground 1

7.Ground 1 is incomprehensible. The fact that the plaintiff was claiming for his entitlement pursuant to the Employment Ordinance per se would not amount to a circumstance under which the Court should depart from the principle of “costs to follow the event”.

8.Ground 1 is therefore rejected.

Ground 2

9.The plaintiff’s financial circumstances is not something that the Court should take into account when it exercises its discretion on costs.

10.Ground 2 is therefore rejected.

Ground 3

11.The fact that the defendant has employed other employees until the end of designated project(s) does not necessarily mean that the plaintiff’s employment term should be interpreted in the same way. It all depends on the terms of the plaintiff’s own employment agreement. In the Judgment, it has been held that the term of the 2^nd Employment Agreement[2] is clear.

12.In my view, the plaintiff’s own misunderstanding of the effect of the 2^nd Employment Agreement does not amount to a factor which would justify a costs order other than “costs to follow the event”.

13.Ground 3 is therefore rejected.

Ground 4

14.The plaintiff alleged that he has tried many times to settle the dispute by offering a 50% salary deduction in order for the defendant to re-employ him.

15.It has been held in the Judgment that the defendant was not obliged to employ the plaintiff beyond 27 July 2020, which was the end date of the 2^nd Employment Agreement.

16.It is not unreasonable for the defendant not to take up the said offer.

17.In such circumstances, the plaintiff’s alleged offer cannot assist him.

18.Ground 4 is therefore rejected.

Ground 5

19.Under this ground, the plaintiff relies on 4 emails:

(1)  In his email dated 6 October 2020 which was marked “without prejudice”, he proposed that the case be settled by way of the defendant giving him a job for 3 years at 50% of his last salary (“the October 2020 Email”);

(2)  In his email dated 11 January 2021 which was marked “without prejudice save as to costs”, he proposed that the case be settled by way of the defendant giving him a job for 3 years at 50% of his last salary, or alternatively a lump sum payment of $800,000 (“the January 2021 Email”);

(3)  By his email dated 25 February 2021 which was marked “without prejudice save as to costs”, the plaintiff asked the defendant to reconsider his offer;

(4)  In his email dated 27 April 2021, he once again reiterated that he was willing to withdraw his claim if a RA job could be offered.

(collectively, “the Emails”)

20.In my view, the Emails cannot assist the plaintiff:

(1)  The October 2020 Email was marked “without prejudice” rather than “without prejudice save as to costs”. It is therefore inadmissiable, and the Court cannot take it into account for the purpose of exercising its discretion on costs: National Commercial Bank Ltd. v Kanishi (Far East) Ltd & Another, Po Ding Co Ltd [2005] 2 HKC 81, at [27] – [28] and Order 62 rule 5(1)(d) of the RHC;

(2)  The offer of a lump sum payment of $800,000 as proposed in the January 2021 Email could have been made by way of a sanctioned offer. Hence, the Court should not take this into account: Order 62 rule 5(1)(d) of the RHC;

(3)  In any event, the plaintiff did not do better than his offers after trial;

(4)  Given the strong merit of the defendant’s defence, it is not unreasonable for the defendant not to engage in negotiations with the plaintiff upon the receipts of the Emails.

21.Ground 5 is therefore rejected.

Grounds 6 and 7

22.Grounds 6 and 7 are totally incomprehensible and are rejected.

Ground 8

23.The defendant initially served two witness statements, one from Mr Lam Ping Hong Robert (Senior Director of the defendant) and the other one from Mr So Wing Kei Wayne. However, at the end of the day, Mr But for the defendant decided not to call Mr So as a witness.

24.The plaintiff now complains that this litigation conduct on the part of the defendant had prolonged his preparation of the trial, including the preparation of PTR, opening submissions, final submissions and reply submissions.

25.In my view, it was not unreasonable for the defendant to:

(1)  prepare a witness statement for Mr So in the first place;

(2)  decide in the course of the trial not to call a witness, having considered the development of the trial.

26.Ground 8 is therefore rejected.

Ground 9

27.The plaintiff alleged under this Ground that since this is a case transferred from the Labour Tribunal, the Court of First Instance should make no order as to costs.

28.This argument is totally misconceived. Once the case has been transferred to the Court of First Instance by an order of the Labour Tribunal, the case is just like any other civil litigation pending in the Court of First Instance.

29.Furthermore, the plaintiff’s claim was made on the basis of his settlement agreement reached with the defendant. This claim was outside the jurisdiction of the Labour Tribunal (see Schedule of the Labour Tribunal Ordinance (Cap.25, Laws of Hong Kong)). In other words, the plaintiff should not have commenced his case in the Labour Tribunal in the first place.

30.Ground 9 is therefore rejected.

Other grounds

31.The plaintiff has raised some new grounds in his reply written submissions. This is entirely inappropriate, because the defendant simply has no opportunity to deal with them.

32.The plaintiff is therefore not allowed to rely on those new grounds.

33.In any event, it is clear that those grounds are unmeritorious.

Conclusion

34.To conclude, I am of the view that the plaintiff has failed to discharge his burden of showing why some different approach other than “costs to follow the event” should be adopted on the particular facts of the present case.

35.Hence, I maintain that costs should follow the event. In other words, the plaintiff should bear the defendant’s costs of the action (including all costs reserved).

ORDER

36.By reasons of the aforesaid, the Cost Order Nisi is hereby made absolute.

COSTS OF THE VARIATION APPLICATION

37.The plaintiff shall bear the defendant’s costs of this application, to be taxed if not agreed.

The plaintiff was not represented

Mr But Sun Wai, instructed by Withers, for the defendant